Since 2011, use of the term ‘digital transformation’ has increased exponentially. Today, it’s used to such an extent that it is easy to lose sight of what it actually means, the principles behind it, and ‘what’s-in-it-for-me’. Confusion may also lie with the interchangeable use of the terms digitization, digitalization and digital transformation – but they are different. If we rewind a little, and consider the definitions of each term, you begin to appreciate the full potential of digital transformation, the advantages it brings and what it means for your organization:
- Digitization: the move from analog (paper-based, hardcopy) to digital (computerized files), still largely based around analog methodology for storing and retrieving data.
- Digitalization: using the now readily accessible digitized information to query and search for information, making daily work processes easier and faster.
- Digital Transformation: using digital technology to create new ways of handling deep-rooted processes, and transform how businesses operate.
The way in which technology has evolved, and in particular the rapid advancement in cloud computing capabilities, means businesses are more empowered than ever to deliberately and strategically transform. With digital transformation comes the opportunity to enhance competitive advantage and improve user experience by leveraging technology to make radical improvements.
Simply using digital technology does not equal transformation: using digital technology to solve and/or predict problems, and intelligent insights for improved decision-making, is. And there are so many advanced technologies at an organization’s fingertips to make true digital transformation a reality. IoT, big data and analytics, cloud, mobility and social media all contribute to the global growth of the digital transformation market.
In fact, the digital transformation market is expected to grow at a CAGR of 16.1% from 2021-2026 to reach US $3.6 billion by 2026 (Global Digital Transformation Market: Current Analysis and Forecast 2020-2026). Of course, we cannot ignore the impact COVID has had on technology: 96% of leaders say that the global pandemic will speed up their digital transformation by an average of 5.3 years. And according to IDC, the economic value of digital transformation is estimated at greater than $20 trillion, or over 20% of global GDP!
It’s clear that businesses that delay or fail to adapt to digital transformation could rapidly get left behind by the competition. While many organizations do have a strategy in place, or are at least working on one, once implemented the benefits will outweigh any initial misgivings, including:
- Improved Efficiency: productivity and efficiency are increased as more automated processes are established, and disparate parts of the organization can collaborate seamlessly together
- Reduced Costs: migrating to cloud storage saves physical housing, operation, maintenance, software upgrade/replacement costs associated with on-premise systems, ultimately improving your bottom line
- Improved Decision-Making: predictive, descriptive and diagnostic data analytics provides all-important business intelligence to help drive future business strategy, strengthen your competitive edge, and improve brand credibility
- Improved Agility: embracing the very latest innovations increases flexibility and agility to pivot quickly and thrive with changing environments or demands
- Improved User Satisfaction: if done well, digital transformation will not only improve the customer or end-user experience, but also gather invaluable insights to better understand and continuously improve the consumer journey
So, you know what digital transformation is, and you may already have a strategic plan in place to start reaping those benefits. Or your organization might already be on the digital transformation journey. But how will you know when you’ve reached your transformational destination?
There are three essential components of a digital transformation to consider:
- Legacy Application Modernization
This is the process of upgrading or improving your existing digital platform with the help of modern solutions that will support future digital goals.
- UI/UX Modernization
This is the process of transforming the customer or end-user experience. Whether it was a website or smartphone app, we can all think of times when something online was complicated to navigate, cumbersome to use, or not dynamic enough to hold our attention long enough for any engagement. Modernizing the look and feel of the customer interface is essential to enhance their experience and secure interactions.
- Database Modernization
This is about transforming your underlying operational databases to make applications more secure, reliable, scalable, and easier to manage. Moving databases to the cloud frees up time to spend on driving and innovating the business, that would otherwise be spent on maintaining on-premise servers.
Digital Transformation: Bottom Line
Even though digital transformation has been around for a while now, every organization will have a different starting point and therefore a unique journey to achieving true transformation. Initial misgivings, such as upfront investment, lack of technical expertise, or data security and compliance concerns could become roadblocks, and seeing phrases like “not for the faint-hearted” doesn’t help!
However, digital transformation shouldn’t feel intimidating. The COVID pandemic certainly taught us just how rapidly businesses need to pivot, and in order to survive and thrive in today’s modern business environment, the opportunity to digitally transform should be warmly embraced – modernize for the future and don’t get left behind.